Terex second quarter results slip

Equipment manufacturer Terex reported a -5% year-on-year drop in revenues for the second quarter to US$ 1.9 billion after gains in its aerial work platform (AWP) and cranes divisions were offset by declines elsewhere.

Total operating income stood at US$ 85.3 million, compared to US$ 175 million in the second quarter of 2012. Terex said the figure was hit by restructuring charges of US$ 65 million during the three months to the end of June.

The AWP division – the largest division by revenues – saw sales jump 17% year-on-year to US$ 607 million in the second quarter, while operating income was up to US$ 101 million compared to US$ 78 million last year, as global demand continued to strengthen.

Terex said it had expanded both its telescopic handler product line and production capacity in line with this, and the division’s backlog was up +38% compared to the second quarter of last year.

Terex Cranes, meanwhile, reported +3% year-on-year growth in revenues to US$ 521 million for the quarter, but operating income dropped to US$ 23 million, compared to US$ 50 million in the second quarter of last year. Terex said while global markets were softer than it had expected, it had seen improved orders for large crawler cranes.

The construction division reported a -30% year-on-year drop in revenues to US$ 275 million, and an operating loss of US$ 5 million, compared to income of US$ 10 million at the same point last year. Terex said global markets remained soft for earthmoving and scrap handling equipment.

The materials processing division reported a -7% drop in sales to US$ 176 million and operating income of US$ 25 million, compared to US$ 29 million in the second quarter of 2012. It said the European mineral market remained weak.

Finally, material handing and port solutions (MHPS) sales fell -16% year-on-year to US$ 370 million on an operating loss of US$ 57 million, compared to income of US$ 11 million last year. Terex net sales of industrial cranes fell -13% on global weakness.

Change in outlook

Terex revised its full-year forecast and now expects to achieve total revenues of between US$ 7.5 billion and US$ 7.7 billion in 2013, down from its previous estimate of US$ 7.9 billion to US$ 8.3 billion. Its total forecast operating margin for the year is between 6% and 7%, compared to its previous outlook of between 7% and 8%.

Terex Chairman and CEO Ron DeFeo said the marketplace overall had softened compared to the manufacturer’s original expecations for 2013.

“Overall by geography, North America continues to improve, but now at a slower pace. Europe remains challenging, particularly for our cranes, construction and MHPS segments, and the markets in the rest of the world remain mixed.

“We took substantive actions in the second quarter to further adjust the cost structure of the MHPS, cranes and construction organisations. While these actions are difficult, the benefits to our stakeholders are expected to have a meaningful impact on our future results, particularly in 2014 and beyond.”